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• Chinese oil firms, Qatar in talks on gas field stakes

  • Reuters, SINGAPORE
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  China’s national oil companies are in advanced talks with Qatar to invest in the North Field East expansion of the world’s largest liquefied natural gas (LNG) project and buy the fuel under long-term contracts, three people with knowledge of the matter said.

  It would be the first such partnership between the two nations, among the world’s top LNG consumers and producers, as the Middle Eastern energy exporter shifts to expand its Asian client base. Global energy corporations used to be the main investors in Qatar’s gas industry.

  The Qatari supply deal would help China create a buffer against spot price volatility and diversify its imports; relations with two major suppliers — the US and Australia — are at a low point, and another, Russia, is in the midst of a war and faces widespread sanctions. Beijing views gas a strategic bridge fuel to replace coal on its path to carbon neutrality by 2060.

  

  An employee walks on top of an oil tank at a Sinopec refinery in Wuhan, China, on April 25, 2012.

  Photo: Reuters

  Qatar was China’s largest LNG supplier after Australia in the first five months of this year, data on Refinitiv Eikon showed.

  State-controlled China National Petroleum Corp (CNPC, 中國石油天然氣) and China Petrochemical Corp (Sinopec, 中國石化) are expected to invest 5 percent each in two separate export trains, part of the nearly US$30 billion North Field expansion project, the three sources with knowledge of the discussions said.

  “The participation, even of a small stake, would give Chinese direct access to the highly globalized project, and learn its management and operational expertise,” said one of the sources, a senior Beijing-based industry official.

  The North Field Expansion includes six LNG trains that would ramp up Qatar’s liquefaction capacity from 77 million tonnes per annum (mtpa) to 126 mtpa by 2027, consolidating its status as the world’s largest producer.

  Qatar treats each export train as one joint venture, and CNPC and Sinopec will invest in one train each, the sources said.

  Sinopec declined to comment. A CNPC representative said he had no information to share.

  QatarEnergy did not respond to Reuters’ request for comment.

  In addition, CNPC and Sinopec are negotiating with state-run QatarEnergy to buy up to 4 mtpa of LNG each for up to 27 years, two of the sources said, in what would be the single-largest purchase deals of the super-chilled fuel between the two nations.

  China last year imported nearly 9 million tonnes of LNG from Qatar, or 11 percent of the country’s total LNG imports.

  Discussions are focused on the pricing of long-term supply deals that would be linked to the global oil market, another of the three sources said.

  QatarEnergy on Sunday said that TotalEnergies had become its first partner for the project, winning a 25 percent stake in one train. Asian buyers are expected to make up half the market for the project, and buyers in Europe the rest, QatarEnergy’s chief executive said.

  Exxon Mobil Corp, Shell, ConocoPhillips and Eni had also submitted bids for the project.

  “Chinese participation in the trains are more of a financial investor as the stake is very small. The key is the price negotiations for the long-term gas offtakes,” the third source said.

  The source added that Indian companies are also interested in discussing stakes with Qatar, but did not elaborate.

  China, the world’s top LNG buyer last year, imports 45 percent of its natural gas needs and sees Qatar as a reliable long-term supplier after a flurry of purchase agreements with the US late last year.
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